The sage of Quiznos

The skills of Greg Brenneman, a corporate-turnaround specialist, are in demand

A FEW years ago Greg Brenneman was asked to give some advice to MBA students thinking about the next step in their careers. “If you have a chance of working for a healthy company or a sick one,” he wrote, “choose the sick one. The sickest ones need the best doctors and it's a lot easier to stand out in a company that needs help.” He should know. Throughout his career, Mr Brenneman has gone looking for trouble—first as head of the corporate-turnaround practice at Bain, a consulting firm, and then in a succession of senior roles, including stints at Continental Airlines, Burger King and Quiznos, two American fast-food chains.

Each of these three businesses was going through a difficult time when Mr Brenneman came on board—he described Continental as “the world's worst $6 billion company” before joining it—and at each he applied a similar approach to sorting out its problems. His tactics, which may provide inspiration for those managers whose firms are struggling in the economic downturn, have impressed private-equity partners. On August 19th Mr Brenneman stepped down as chief executive of Quiznos (though he has become its executive chairman) to take up a new role as chairman of CCMP Capital Advisors, a private-equity firm.

As well as helping CCMP do deals, Mr Brenneman will coach executives at firms in its portfolio. “It's back to the future in private equity,” he says enthusiastically, pointing out that because cheap finance has evaporated, investors must now concentrate on improving the operations of the companies they invest in. That reminds him of private equity's early days when, he says, “you had to get in and roll your sleeves up and grow businesses.”

So what treatment does Mr Brenneman recommend for a sick corporate patient? First, stop it doing things that bleed red ink. Take the case of Continental, which he joined in 1994 as chief operating officer when the company was on the brink of a third stint in Chapter 11 bankruptcy protection. After Mr Brenneman was hired by Gordon Bethune, the airline's new boss, they quickly worked out that 18% of its flights were losing money. Axing these lossmakers helped pull the carrier out of its financial nosedive.

The next step is to come up with a clear strategy—and then stick to it. This is especially important in a crisis, when managers can easily lurch from one master plan to another in pursuit of profit, confusing employees and customers as they do so. Before Mr Brenneman took over in January 2007 at Quiznos, which has more than 5,000 restaurants worldwide, the company was flailing around. Angry franchise-holders had launched lawsuits against the firm and customers were shunning its pricey sandwiches. Revenue growth at many restaurants had stalled.

Mr Brenneman quickly made clear to staff that the priority was to reignite profitable growth. Since then, Quiznos has revamped its procurement to cut raw-materials costs, bolstering franchisees' profits. It has also expanded delivery and catering services, which were offered in only a handful of outlets. This has boosted sales per restaurant, though the privately owned firm refuses to say by how much. In another effort to increase sales, Quiznos stepped up its international expansion: last week it said that it will add at least 500 restaurants abroad over the next two years in countries such as India and Brazil.

Mr Brenneman's turnaround tactics also call for launching new products. For instance, when he became chief executive of ailing Burger King in 2004, he championed the Enormous Omelette Sandwich, a calorie-packed mega-bun that was popular with the Burger King faithful. (He left the company in 2006 having revitalised it in preparation for a flotation.) At the other end of the food spectrum, Quiznos has launched the Sammie, a $2 sandwich that appeals to people who had been avoiding the chain because of the relatively high cost and calories of its other food.

Although new products can be important to a successful turnaround, new managers are absolutely essential. “It's hard for the same people who put you in the ditch to pull you out of it,” cautions Mr Brenneman, who admits he has occasionally failed to change top managers quickly enough at some of the companies he has run. At Quiznos he overhauled much of the senior executive team, bringing in fresh blood from the ranks of other fast-food giants, including Burger King.

The doctor will see you now

His recruits have been impressed by another Brenneman tactic. “He's taught me the importance of seizing the airwaves and making clear what the business agenda is,” says Dave Deno, Quiznos's new boss. Each Friday the fast-food chain's franchise-holders get a voicemail updating them on the business. Many of these have been left by Mr Brenneman, but occasionally other managers take a turn. The plain-speaking Mr Brenneman likes this because, he says, “if someone gets on a voicemail and promises something to thousands of people, they will do it.” All voicemails and e-mails from franchise-holders must be answered within 24 hours. This has helped thaw relations with disgruntled restaurant-owners, though some lawsuits still rumble on.

Successful turnarounds rely on another ingredient, too: plain hard work. That is something Mr Brenneman is used to. Growing up in rural Kansas, he once held three jobs at the same time during a school holiday, working from early in the morning until midnight. That work ethic has never deserted him. Colleagues say he often sends out e-mails written in the small hours of the morning. And although he has just stepped down as a full-time chief executive, Mr Brenneman will not be twiddling his thumbs: as well as his responsibilities at CCMP and Quiznos, he has his own small private-equity firm near his home in Houston and sits on the boards of Home Depot, a retailer, and ADP, a payroll-services company. With the global economy in the doldrums, this particular corporate doctor can expect to have plenty of patients queuing up in the waiting room.